Tuesday, April 08, 2014

Statements about quality care were puffing despite standard of care

ISC sued IHC for violations of the Lanham Act and Utah’s
Truth in Advertising Act and intentional interference with actual/prospective
economic relations. The court dismissed the Lanham Act claims and declined to
exercise jurisdiction over the state law claims.IHC offers insurance plans and operates
hospitals and clinics. ISC treated strokes and transient ischemic attacks (TIA)until
it closed, allegedly as a result of IHC’s conduct.

Though the standard of care for stroke and TIA allegedly
requires that the patient either be immediately hospitalized or be seen within
forty-eight hours at a same-day, urgent-care stroke clinic, plaintiffs alleged
that IHC frequently saw stroke and TIA patients in IHC emergency rooms, failed
to hospitalize such patients, and refused to refer them to the Stroke
Center—the only same-day, urgent-care stroke clinic in Utah.Treatment at the Stroke Center was not
covered by IHC insurance, so many stroke and TIA patients were allegedly forced
to settle for IHC’s allegedly sub-standard treatment.IHC allegedly misled consumers about their
care, misrepresenting that ICH provided high quality care with the best medical
practices.IHC’s advertising allegedly
misled consumers to believe that IHC employs many specialists in stroke/TIA
treatment when it has almost no one in those categories, and to believe that
IHC carefully complies with federal laws that ban rewarding doctors for
referrals even though IHC recently settled with DoJ for violations of those
laws.

The court found that the complaint didn’t state a plausible
claim for relief; many of the challenged statements weren’t statements of fact
and the rest weren’t adequately alleged to be misleading or give rise to a
competitive injury.

Non-fact: IHC’s claim to provide “high quality care,” “the
best possible care,” “excellent care of the highest quality at an affordable
cost,” and that it employs “best medical practices” were puffery as a matter of
law.These were “vague generalities that
no reasonable person would rely on as assertions of particular facts.”
Plaintiffs argued that these statements were objectively false because IHC fell
below the standard of care for stroke and TIA patients. But literal falsity
isn’t dispositive; the question is whether any reasonable person would rely on
the assertions.As a well-worn old case
says, puffery is “a seller’s privilege to lie his head off, so long as he says
nothing specific, on the theory that no reasonable man would believe him, or
that no reasonable man would be influenced by such talk.”(Raising as always the question of why
advertisers use it.)“Claims as to high
quality and low cost—even if linked to a particular product or service and even
if false—are paradigmatic examples of puffery upon which no reasonable person
would be expected to rely.”

Plaintiffs argued that “best medical practices” had a
specific referent, the standard of care.(Example statement: “all three Intermountain divisions—Health Services,
SelectHealth, and the Intermountain Medical Group—contribute in essential ways
to the sharing of best medical practices, and raising the standards of clinical
excellence.”)But this statement wasn’t
made in the context of any particular product or service.Even if the claims were made about stroke and
TIA services in particular, they still would be too vague.If IHC specifically stated that its practice
of refusing to either hospitalize stroke and TIA patients or to refer such
patients to a same day stroke or TIA clinic is in accord with the best medical
practices, plaintiffs could state a claim, but IHC wasn’t alleged to have done
that.Also, the “best medical practices”
statements were phrased to suggest puffery, without defining the term.“Whatever exactly it means to ‘contribute in
essential ways to the sharing of best medical practices,’ no reasonable
consumer would rely on the claim in choosing IHC as its stroke and TIA
treatment provider.”

Plaintiffs also alleged that IHC misled patients and
consumers to believe that it employs more specialists in stroke and TIA
treatment than it in fact does. The
court found its statements true and not misleading.Stroke care isn’t its own category on the IHC
website.It’s listed under “Heart and
Vascular Services.” IHC’s “Find a Doctor” link from its stroke care page
provides a list of heart and vascular surgeons, but not vascular neurologists
or stroke specialists. Plaintiffs argued that these features induced consumers to
falsely believe that the heart and vascular physicians employed by IHC specialize
in stoke and TIA treatment.

The court found that implausible. Next to each doctor’s name
is his or her primary area of specialization, and clicking on the name gives
more information, including additional areas of specialization, practice areas,
and board certifications. None of the information says they specialize in
stroke or TIA treatment.“The fact that
the list is accessible from the stroke care portion of IHC’s website may
suggest that some of the physicians listed are competent to provide stroke and
TIA treatment.” But plaintiffs didn’t
allege that such an implication was false, only that they weren’t
specialists.“Given the extensive
information regarding the physicians’ areas of focus and specialization, there
is no reason to believe that patients or consumers would infer that some or all
of those physicians specialize in—and do not merely have competence with
respect to—the treatment of stroke.” The Lanham Act didn’t require an
affirmative warning here.

Similarly, IHC’s advertising for its Neuroscience
Institute—advertised as offering stroke patients with resources for “ongoing
medical needs after hospitalization” and employing “subspecialists including
epileptologists, general neurologists, physical medicine and rehabilitation physicians,
and neuropsychologists”—wouldn’t mean anything more to consumers than what it
says; consumers wouldn’t likely receive the message that these providers are
subspecialists in treating stroke.

As for IHC’s statements about its code of
ethics/anti-kickback practices, IHC’s claims were true and not misleading.IHC said it

carefully review[s] financial
relationships with physicians and other health care practitioners for
compliance with the anti-kickback and Stark laws. All financial arrangements
and contracts with physicians and physician groups must have legal Department
review. Intermountain will not improperly induce or reward referrals of
patients or services as prohibited under these laws and regulations.

Plaintiffs alleged that IHC’s refusal to refer patients to
the Stroke Center or provide insurance coverage for treatment inappropriately
created revenue for IHC, and that ICH recently settled claims with DoJ over a
compensation arrangement that improperly rewarded physicians for referrals in
violation of federal law.

The court held that this statement didn’t suggest that IHC
or its employees uniformly meet the ethical standards outlined in the Code of
Ethics, which set out disciplinary action for violations and told everyone to
report suspected violations.“In
recognizing a potential violation of one of its ethical standards, reporting
that violation, and accepting the consequences [with DoJ, IHC acted in exactly
the way contemplated by the Code of Ethics.” Likewise, IHC’s standard regarding
the avoidance of “actions that inappropriately create revenues” didn’t make its
decision not to do business with the Intermountain Stroke Center false
advertising.

Plus, plaintiffs didn’t plausibly allege competitive injury from
these statements. Their allegations of injury were conclusory, and the alleged
misrepresentation wasn’t about IHC’s stroke care but about its business
operations generally.It wasn’t
plausible that a consumer trying to decide about stroke treatment would be
influenced by these statements in a Code of Ethics intended primarily for IHC
employees. The Stroke Center may have suffered harm, but not from the alleged
misrepresentation.

Finally, IHC’s pamphlet—“Life After a Stroke or TIA”—was
also nonmisleading.The pamphlet’s entry
on “Aftercare” said that “[i]n the first few weeks after your discharge, you’ll
need to see members of your medical team. Use the chart below to keep track of
these important appointments.” The second entry on the included chart is for an
appointment with a neurologist and provides that the appointment is “usually
recommended 4 to 6 weeks after you leave to go home.” Plaintiffs argued that
IHC’s pamphlet was likely to mislead TIA patients to believe that they can
“safely wait 4 to 6 weeks before following up with a neurologist.”Though plaintiffs alleged that the standard
of care required either hospitalization or quick referral to a stroke/TIA
clinic to see a neurologist, the pamphlet on its face was directed to patients
who’d been admitted to, and were being discharged from, a hospital. Thus, it
was unlikely that consumers would believe that the pamphlet was recommending
something less than the standard of care regarding hospitalization.

Even if a TIA patient treated in an ER got the pamphlet,
that still wasn’t false advertising about the “the nature, characteristics,
[or] qualities” of IHC’s services. It provided only very general information about
stroke; IHC’s name only appeared twice: once as an author and once as a
resource for stroke rehab and support groups on the last page.

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